Gap Inc. executive John Lillie is retiring as vice chairman and is resigning from its board of directors, the company said Thursday.

His departure ends a decade-long stint with the nation's largest specialty retailer -- a $14 billion company trying to emerge from a two-year sales slump and find its way under a new chief executive.

Lillie, 65, has been on the board since 1992 and has been vice chairman since January 2001.

At that time, Gap said it was creating the vice chairman's position to oversee supply-chain, administrative and financial operations under now- retired Chief Executive Officer Millard "Mickey" Drexler.

Drexler in September handed his CEO-president reins to Paul Pressler, who formerly ran Walt Disney Co.'s resort and theme-park business.

Lillie reported directly to Gap's CEO. Now, the executives who answered to him will report directly to Pressler -- at least for the time being, according to the company.

Gap has not determined whether it will retain the position or how the vice chairman's operational duties will be handled at the top, Gap spokeswoman Claudia Hawkins said.

Gap is under pressure to cut costs, in part by shortening production times, and might want new supply-chain leadership for that reason, Wells Fargo Securities retail analyst Jennifer Black said.

"In reality, the Gap has a lot of work to do in shortening their lead times, " she said. "Paul Pressler wants to have definitive change . . . in the sourcing capabilities."

In a company statement, Lillie said: "I'm pleased with the progress the company has made in the past two years in managing costs and improving many aspects of the business. I'm confident in the management team and in the direction the company is moving."

Lillie previously served as president of Sequoia Associates, a Menlo Park leveraged buyout firm; chairman and CEO of American President Cos., a large shipping concern; and chairman and CEO of grocery chain Lucky Stores, now part of Albertson's Inc.

Two other directors have left Gap since Pressler joined the company: Apple Computer Inc. CEO Steve Jobs and Drexler, whose spot went to Pressler. It's now an 11-member board.

The news of Lillie's departure came after the close of markets. For the day,

Gap shares rose 44 cents, or 3.1 percent, to close at $14.62 on the New York Stock Exchange.